Having failed to do his homework, Gove flunked the exam

The Education Secretary's decision to bow to his critics and retain GCSEs is, in a competitive field, the most humiliating retreat yet from a coalition minister.

It looks like rumours of the death of GCSEs have been greatly exaggerated. In a statement to the Commons at 11:30am today, Michael Gove, the man lionised by Conservative MPs as the coalition's greatest reformer, will announce that the exams will not, after all, be scrapped in favour of English Baccalaureate Certificates (EBCs). (N.B. it is these new qualifications, rather than the English Baccalaureate or EBacc, a performance indicator, which measures the percentage of students in a school who achieve grades A*-C in English, maths, two sciences, a foreign language and history or geography at GCSE level that have been abandoned. Confusing, I know.) 

Under the original plan, 14-year-olds were due to begin studying for EBCs in English, maths and science from 2015, with the first exams sat in 2017, to be followed by history, geography and languages in 2018. They will now sit GCSEs instead. In addition, Gove will announce that his plan to introduce a single exam board for each subject has been scrapped after he was warned by civil servants that it could breach EU procurement law (a pity since this is the one measure that really would have halted the "race to the bottom" that Gove has rightly denounced). 

So, why the change of course from the coalition's Robespierre? Largely because the Liberal Democrats, the education select committee, former Conservative education secretary Kenneth Baker (who told me that he "didn't know" how Gove was going to introduce his exam reforms) and Ofqual were all, to varying degrees, telling Gove that replacing GCSEs with EBCs was a terrible idea. The select committee, for instance, said last week: "We have not seen any evidence to suggest that the proposed changes will be more successful than GCSEs in addressing underachievement or in narrowing the attainment gap between the most disadvantaged students and their peers." Its Conservative chair Graham Stuart said: "Ministers want to introduce a new qualification, require a step change in standards, and [want to] alter the way exams are administered, all at the same time. We believe this is trying to do too much, too quickly, and we call on the government to balance the pace of reform with the need to get it right." Gove's humiliating retreat (in a competitive field, the most dramatic yet from a coalition minister) suggests that he now agrees, although it is worth asking whether the reforms would be proceeding under a Conservative majority government. 

The Education Secretary will, however, rightly point out that the post-14 exams system is still being radically reshaped. The modular system will be scrapped in favour of one examination sat at the end of the two-year period; extension papers in maths and science will be introduced for the brighest pupils; English and history papers will feature more extended writing and maths and science papers more problem solving; and a new National Curriculum will be introduced, with, the Telegraph reports, "a focus on multiplication tables and mental arithmetic in maths, an emphasis on grammar, punctuation, spelling and pre-20th Century literature in English and a clear chronology of British and world events in history."

In addition, league tables, which currently rank schools by the proportion of pupils gaining five A* to C grades, will be reformed so that they now list performance in eight subjects, which must include English, maths and three other EBacc disciplines (two sciences, a foreign language and history or geography). 

By any measure, these are dramatic and ambitious reforms. But the programme of change is so different from Gove's original blueprint that one cannot consider it as anything but a defeat for the Education Secretary. He originally wanted to replace GCSEs with a new two-tier exam (modelled on O-levels and CSEs) only to be foiled by the Lib Dems. After this retreat, the compromise solution of EBCs was announced; all pupils would, contrary to Gove's initial wishes, sit the same exams. Now this too has been killed at birth. 

Gove, who arrogantly lectured the education establishment for months on the need to scrap GCSEs, has been taught a lesson in the perils of hasty reform. Having failed to do his homework, the Education Secretary has flunked the exam. 

Education Secretary Michael Gove will announce today in the House of Commons that GCSEs will be not be scrapped. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Getty
Show Hide image

Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation